Environment Committee on June 19th, 2007

[The Chair, Conservative, Bob Mills]

Yes, carry on, Mark, and make your presentation, so we can get to questions, and the members will ask what they want to ask from you.

Thank you.

[Prof. Mark Jaccard]

I'm almost finished here.

What I would say, with respect to the G8 discussion and the previous speaker and other discussions, is that what I'm hearing is that this is a first in the sense of having the United States and other major countries agree that we need a global agreement and that all countries need to be involved. This is not a first. I've been around this for two decades, and in the 1990s we had.... I'd need to go back to look at the records of G7 and G8 meetings, but I am quite convinced that we had governments standing up as a whole in G7 and G8 saying we needed global targets and efforts from greenhouse gas reductions. But I'll drop that.

If I'm to think of how countries—the G8, whoever—are setting targets and then ask, with the area of my expertise, which is how they would achieve those targets, I would point out to your committee, to you, that when you're designing policies to achieve your targets, the atmosphere must have a value. There are three reasons why. One is that fossil fuels are still, and in many cases will remain, a relatively low-cost energy source--and that's likely for at least a century--compared to renewables and nuclear. Second, it's cheaper to use fossil fuels without capturing the carbon dioxide. Therefore, thirdly, in a free market economy, innovations and new products and services will look to burn these fuels and use the atmosphere as a repository for the CO₂ unless you have policies that explicitly prevent that. The policies to prevent that have to put a charge or a regulated cap on emissions into the atmosphere.

So the second part is a policy lesson when you're trying to hit these targets—G8 or otherwise—and that is that subsidies are not nearly as effective as they appear. It looks like you're giving someone $50 for an efficient fridge and that therefore energy use from fridges will fall in that particular household. The evidence that we now know from two decades of analysis contradicts that. It says that we measure efficiency by per cubic metre of the fridge, for example, and yet fridges are getting larger. The service of refrigeration involves the innovation of new products such as desktop fridges, wine coolers, water coolers, a basement fridge, and so on. So these kinds of subsidy policies without a price on the atmosphere cannot get you there.

The only final point I want to make is that I work in this area and have worked here for two decades. The world energy assessment, which is developed by the International Energy Agency, the World Energy Council, and various programs of the United Nations, came out in the year 2000 with a significant section on policy. The new global energy assessment will come out in 2010. In the last year I was appointed as the head person for policy analysis in that process, and so I'm assembling a team of the top people internationally on policy design. Quite frankly, the message I just gave you about policy use and policy failures is held universally by these leading independent experts. These are academics who advise governments or leading industry people who are in the research end of this.

So what I did just recently—and I'll close now—is simulate the policies in Canada to see if they would achieve the targets we were looking at, and the results are there for anyone to see. I did not find that they did.

So I'll complete my comments there and stand open for questions.

[The Chair, Conservative, Bob Mills]

Members, we have roughly just a little over five minutes per round, so that's what we'll stick to, because of Mr. Jaccard's time.

I'll start with Mr. Godfrey, please.

[John Godfrey, Liberal, Don Valley West, ON]

Thank you very much.

Welcome back, Dr. Jaccard, to this committee.

The connection between what you're telling us and the overall topic is simply Canada's credibility at the G8 meetings. When we said we were going to meet a 50% emission target, for example, would it be fair to say that the conclusion of your study for C.D. Howe is, as you put it, that:...overall emissions in Canada are unlikely to fall below current levels. The government is likely to miss its 2020 emissions target by almost 200 megatonnes. Moreover, because of this gap in 2020 between target and reality, it is unlikely that a future government would be able to achieve the ambitious 2050 target.

Is that a reasonable summary of your study?

[Prof. Mark Jaccard]

Yes, it is.

[John Godfrey, Liberal, Don Valley West, ON]

A second conclusion you come to is that for the same amount of money as the government might be spending, the costs of the current policies being proposed by the government to the GDP would be comparable to those of more effective policies that would actually achieve targets. Is that a secondary conclusion?

[Prof. Mark Jaccard]

Yes, it is.

[John Godfrey, Liberal, Don Valley West, ON]

You ask the question, what is the policy link to the target? Let's look at the largest source of greenhouse gas emissions, and you reference this, which is the large industrial emitters, which collectively put out about 53% of emissions. Can you take the case of something like an oil sands producer and run through the provisions of the regulations?

[The Chair, Conservative, Bob Mills]

Yes, Mr. Harvey.

[Luc Harvey, Conservative, Louis-Hébert, QC]

Last week, we had quite a spectacle for two hours trying to get the G8 matter dealt with. Today, we are ready to talk about it, but we have a witness who did not participate in the G8 and did not even know that he was supposed to talk about it. So we are still not dealing with it. I hope that we are going to get to it soon, because we wasted two hours last week discussing it, Mr. Chair.

[The Chair, Conservative, Bob Mills]

Mr. Harvey, technically we do have a problem with what did happen. We don't have an official order. We are more or less in no man's land. My feeling is that we can talk about climate change, about the G8 obviously, and the government plan. I think I'm going to let that range fairly widely and get on with the best use of our time.

[John Godfrey, Liberal, Don Valley West, ON]

Coming back to the question, Dr. Jaccard, on the lack of a policy link to the target, can you take the specific case of large industrial emitters and take the case of an oil sands producer? What are the various ways that the oil sands producer could get out of actually reducing emissions, or even improving emission intensity, given the plan as you have seen it?

[Prof. Mark Jaccard]

The oil sands producer could decide to do nothing different from business as usual in their own plant or activity in terms of reducing emissions and instead subsidize. In other words, instead of government subsidizing, the oil sands producer would subsidize reduction actions by other parties in the non-regulated part of the economy. Or they could pay other industrial actors to make reductions as a way of getting the credits they need.

I would say that's not necessarily a bad thing. Where it's most expensive to reduce emissions in the country, you don't want it to happen. You want it to happen where it's cheapest, and so you do try to have trading mechanisms.

The challenge here is that the regulated cap is on part of the economy, but actually they have an opportunity to go to the unregulated part of the economy. That's the part of the economy where we don't have that constraint of a price on the atmosphere. That's what I'm worried about. I hope that's clear. And that would make it hard to achieve our G8 targets.

[John Godfrey, Liberal, Don Valley West, ON]

What about some of the other measures that the government has brought in? I'm thinking of the transit pass. Is that not a good use of public money to achieve our targets?

[Prof. Mark Jaccard]

It's mostly a transfer of funds to transit users. Universally, research shows that only a tiny percent of automobile commuters would be motivated to switch to transit by that tax credit. Therefore at least the taxpayer cost per tonne of CO₂ reduced is, we think, well above $1,000.

[John Godfrey, Liberal, Don Valley West, ON]

What about something like the biofuel strategy? When people talk about biofuels, are there actually other energy implications that are not taken into account in this plan, for example?

[Prof. Mark Jaccard]

Again, the issue is whether you are just regulating part of the economy. Right now we're just looking at the California policy on carbon content in fuel. I note that my colleague Robert Stavins, from Harvard, has just done an analysis of some of the California policies, and I was just reading that this weekend.

I would say that mandating a percentage of ethanol in vehicles is not necessarily a bad thing. You just need to have that as part of a set of policies that ensure there are not parts of your economy that can use the atmosphere as a freeway receptacle. I can't give you a lot of details in the time we have, but that may work. I'm not sure.

[The Chair, Conservative, Bob Mills]

Mr. Lussier is next.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Thank you, Mr. Chair.

Mr. Jaccard, does the Canadian model for calculating emissions that you mention in your report consider the fact that oil sands production is going to go from 1 million to 5 million barrels per day?

[Prof. Mark Jaccard]

I don't have the exact number in front of me, but we use a standard forecast of the oil sands growth, so certainly significant oil sands growth is included in that.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Does the “Policy Emissions” curve on the graph on page 19 of your C. D. Howe report consider the contribution from provincial programs?

[Prof. Mark Jaccard]

That's only to the extent that they've been firmed up with policies that actually are going to be effective, so it's not enough for the Government of Ontario to say that it's going to set some targets; what we really need are some specific policies. Where those exist--such as Hydro-Québec's policy on wind power--we have included them.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Fine. Are you familiar with the European model for greenhouse gas reduction?

[Prof. Mark Jaccard]

Very much so.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

If Canada had the same model as the Europeans, could it achieve the target?